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China: Stocks rebound for second day as money unlocked from IPOs

China stocks gained for a second day on Wednesday, aided by liquidity unlocked from recent IPOs, as some investors took advantage of last week's market collapse to buy relatively cheap shares.

PHOTO: AFP

[SHANGHAI] China stocks gained for a second day on Wednesday, aided by liquidity unlocked from recent IPOs, as some investors took advantage of last week's market collapse to buy relatively cheap shares.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen was up 2.0 per cent at 4,880.13 points, while the Shanghai Composite Index rose 2.5 per cent to 4,690.15 points.

Stocks rose across the board, with transport and infrastructure firms leading the charge.

Hong Hao, chief strategist with BOCOM International, said that last week's 13 per cent tumble in China stocks had wiped out excessively-leveraged punters in the market, setting the stage for healthier rises. "Those who bet with the highest level of leverage are out of the game, and the market is stabilising. The market uptrend is not changed," Mr Hong said.

The market, which was hit by a big wave of initial public offerings last week, also benefited on Wednesday from some subscription money unlocked from the IPOs, which analysts estimate to be around 2 trillion yuan (S$432.6 billion).